At the Forex currency market the British Pound Sterling rate is traded with no clearly determined direction on Wednesday.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to go up, confirming a pair buy signal. Stochastic Oscillator is approaching oversold zone today, creating prerequisites for a trend reversal.
Forex recommendations: considering sentiment in the market, it seems possible that the pair will go down slightly or will consolidate close to the current levels. However, if bearish sentiment intensifies, and there is a breakdown at the level of 1.6050, the pair will go to 1.6010 and 1.5950.
The following UK data was released today:
– Index of retail prices BRC in January: +2.5% y/y against +2.1% y/y in December;
– GDP forecast for 2011: CBI: +1.8% against +2.0% for the previous period.
In general, the main catalyst of the formation of movement direction today - is the external background, which currently seems quiet.
Yesterday BRC released index of retail sales in January (+2.3% y/y, total sales +4.2% y/y).
The situation in the UK economy has not changed significantly yet. We will remind that earlier the study of the National Institute of Economic and Social Researches “NIESR” was made public, which tonality agreed with the market sentiments. Thus, the Institute believes that the Bank of England can raise interest rate three times this year, while the main target will still remain the control of consumer prices growth.
NIESR expects that the rate will increase to the level of 1.75% against the current values by the end of 2011. At the same time it has also upgraded its inflation forecast to 3.8% for 2011 against the previous level of 2.8%. It is expected that unemployment rates will increase to 8.7% this year against the current level of 7.8%.
Earlier NIESR has already made forecasts, which were not too rosy. Thus, the Institute recommended the UK government to postpone for some time a program of budget expenses reduction, since the strategy can bring huge losses in economy, rather than benefit. The statement made by the UK Prime-Minister Cameron earlier partly proves that this year will be extremely difficult for the country’s economy. We would remind that as it became known on Friday consumer confidence in the UK fell to -29 in January, as per GFK/NOP, against the previous level of -21. Thus, the index is at its lowest level since 1994, which indicates consumers’ skepticism regarding prospects of the economy in the nearest future.